By
President
HSA for America

Should You Change
Your HSA Plan Based on

July 1, 2012
Vol. 8, Issue 7  

 

The Supreme Court ruling on the constitutionality of the health care reform law will have a major impact on everyone beginning in 2014, particularly on individuals who purchase their own coverage. Premiums are likely to go up substantially, and many people may be forced to change to more expensive plans. I’ll explain how that works and how you can get the maximum benefit of your HSA right now and in the years to come.

Why It’s Important to Know Your Plan

Starting in 2014, all Americans will be required to carry a health insurance plan that has an actuarial value of at least 60 percent, which means it covers more than that proportion of health expenses in an average year. The average actuarial value for individual plans is currently about60 percent, with many higher deductible plans falling below that.

If your plan doesn’t meet this 2014 requirement, you may unfortunately have to switch to one of these more expensive plans in order to avoid penalties. (Alas, the promise, “If you like your current plan you can keep it” may not be true in this case.)  Regulatory agency rulings will probably be forthcoming, and I’ll keep you up-to-date so you can make an informed decision. I always recommend that you contact your Personal Benefits Consultant for our Annual Comprehensive Policy Review at no charge, but that’s more important than ever now. Your Personal Benefits Consultant can help you compare your coverage to new plans that become available every year to be sure you continue to have the best option.

The carriers will be releasing information next year about how plans may change in 2014. There may also be legislative solutions if it is decided that millions of people may be forced to switch to lower deductible plans.We’ll share more details as this information comes out.

The HSA is still one of the best tax-favored options, so I recommend you deposit as much money in your HSA as possible now in order to be prepared for the future. Here are a couple of things you should know about that.

Can Your HSA Pay for Medicare?

You can make HSA contributions until you enroll in Medicare Part A or B, so you can fund your HSA after you become 65 if you delay signing up for Medicare because you’re still working. Once you enroll in Medicare, though, you cannot contribute to an HSA. You will, however, be able to use your HSA money to buy long-term care insurance. In fact, those premiums qualify as tax-free, penalty-free withdrawals, but the amount is limited based on age and annual adjustments for inflation. Check our Long Term Care page to get more information about these plans.

And, HSA funds can also pay your Medicare premiums. When either you or your spouse begin paying Medicare premiums, you can pay for them out of your HSA or reimburse yourself if you have Medicare premiums automatically deducted from your Social Security check. Even though you will no longer be able to make HSA deposits, your spouse still can as long as he or she is under age 65. Your spouse’s contribution can pay your Medicare premiums. You can also pay for dependent’s medical expenses. You may also want to buy a Medicare Part D Prescription plan with your HSA. Part D premiums for you, your spouse, or dependents are qualified medical expenses.

Even after you enroll in Medicare, you may make an HSA contribution for an earlier period when you were eligible and didn’t make that contribution. In fact, you have your entire lifetime to reimburse yourself as long as your HSA was established when you incurred the expense.There are some other really interesting ways to maximize your HSA, like how you and your spouse can both make catch-up contributions. And, I’ll explain that and more in the next issue.

 


To your health and wealth!



President - HSA for America

 


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